Energy prices squeeze European industry: Playmobil exits Germany, heat pump sales jump

The final shift at Playmobil's Dietenhofen factory in Bavaria ended this week. Brussels Signal reported on 24 June that the remaining employees were put on paid leave ahead of an official shutdown at the end of June. Around 350 jobs are affected at the site, which specialised in making the plastic figures.

The Horst Brandstätter Group, which owns Playmobil, confirmed that production is being consolidated at existing facilities in Malta and the Czech Republic. The company cited sharply rising production costs in Germany as the decisive factor, naming high energy prices alongside elevated wages and ancillary labour costs. Unions have called the move a catastrophe for the region. Business groups describe it as the latest example of a mid-sized enterprise relocating. Administrative and logistical functions will remain in Germany, but the actual production of Playmobil figures will now take place entirely outside the country that created it.

Germany's cost problem is structural, not seasonal.

Brussels Signal notes that Germany's household electricity prices remain among the highest in the world: currently the fifth most expensive globally and the second highest among major industrial nations. Energy-intensive processes have been particularly exposed since the 2022 energy crisis, despite partial government relief schemes. The closure comes amid ongoing warnings from German industry about structural competitiveness problems. High energy costs, driven by the country's rapid shift away from nuclear and coal without sufficient baseload alternatives, combined with bureaucracy and wage pressures, are accelerating what some economists describe as creeping deindustrialisation. Playmobil's management made clear that the cost environment in Germany had become unsustainable for labour-intensive plastic injection moulding. The company has also faced declining sales and financial pressure in recent years, but the explicit naming of energy prices puts the decision squarely in the broader European industrial policy debate.

Heat pumps: the demand-side response.

Residential heat pump sales rose 17 percent year on year across 11 European countries in the first quarter of 2026, according to the European Heat Pump Association. A total of around 575,000 units were sold from January to March, up from 494,000 in the same period in 2025. France, Germany, and Poland averaged 25 percent growth over the quarter. National experts cited rising energy prices and energy insecurity concerns as key drivers, effects the EHPA said were particularly pronounced from March onward. Iran closed the Strait of Hormuz on 2 March, sharply pushing up gas and oil prices across Europe. The overall average was held down by Austria, where sales fell 30 percent due to the absence of government subsidies. That divergence matters for anyone reading the 17 percent headline as a uniform trend: policy support, not just price signals, shapes adoption.

"If your streaming service doubled its price then blocked its movies you'd find a better one," said Paul Kenny, director general of the EHPA. "Consumers have realized heat pumps are the solution when gas and oil are erratic in price and supply."

Kenny said the European Commission has outlined steps to support heat pump adoption in its energy crisis plan, including VAT and tax reductions and social leasing schemes for lower-income households, and called on EU governments to implement these measures rapidly. Studies published in 2024 found that heat pump and PV combinations become cheaper than gas heating within 11 to 14 years, and that air-source heat pumps rank among the cheapest residential heating options with or without solar. In Germany, public and political sentiment around heat pump policy has remained volatile despite broad support for the technology.

US market shows the same pressure, different mechanism.

Across the Atlantic, prices in the largest US wholesale power market have nearly doubled in the past year. The Register reported on 15 May that datacenter demand is the main driver. The PJM Interconnection serves all or parts of 13 states and the District of Columbia, including Northern Virginia, home to the densest cluster of datacenters in the world. Monitoring Analytics, the official market monitor for PJM, said in its Q1 2026 state of the market report that the total cost per megawatt-hour of wholesale power rose from $77.78 in the first three months of 2025 to $136.53 in the same period this year. That is an increase of 75.5 percent year over year. The report identified datacenter load growth as the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices. It added that but for datacenter growth, both actual and forecast, the capacity market would not have seen the same tight supply demand conditions.

Monitoring Analytics also warned that the price impacts on customers have been very large and are not reversible, and that they will be even larger in the near term unless the issues associated with datacenter load are addressed in a timely manner. On the current evidence, the report does not expect a timely resolution. PJM told The Register it is working with states and member companies to address consumer impacts on multiple fronts, including extending market caps put in place since the 2025/2026 auction, authorising multiple transmission expansion projects now in development, and reforming wholesale electricity market rules. Monitoring Analytics did not respond to questions.

What the two stories share.

Playmobil and PJM look like unrelated stories: a Bavarian toy factory and a US regional grid. They are not. Both show energy costs becoming a location decision, whether for a labour-intensive injection moulding line or for a datacenter campus. The difference is who absorbs the cost. In Germany, the company moves production to Malta and the Czech Republic, and the workers at Dietenhofen take the hit. In PJM, Monitoring Analytics says other customers, whether residential, commercial or industrial, should not be treated as a free source of insurance, or collateral, or financing for data centers, yet that is what most of the proposals related to a backstop auction actually do. The watchdog's preferred fix is that datacenters be required to bring their own power, with fast-track interconnection options for such projects and otherwise a queue that would only connect datacenters when there is adequate capacity to serve them. PJM has been planning a one-time backstop auction at the request of the Trump administration and the governors of the states it serves, but Monitoring Analytics is not convinced by the proposed structure.

Europe's own political pressure is mounting in parallel. The Financial Times reported on 25 September that Brussels has warned capitals to tackle the energy crisis or see the far right take power, while Reuters reported on 23 September that EU countries back carbon market changes to curb price spikes. Those are context headlines, not facts this analysis relies on, but they frame the same constraint: governments are trying to keep industry without letting energy bills rise further.

The numbers to watch.

• Around 350 jobs affected at Playmobil's Dietenhofen site, per Brussels Signal.
• Germany's household electricity prices: fifth most expensive globally, second highest among major industrial nations, per Brussels Signal.
• 575,000 residential heat pump units sold across 11 European countries in Q1 2026, up from 494,000 a year earlier, per the EHPA.
• France, Germany and Poland averaged 25 percent heat pump sales growth; Austria fell 30 percent without subsidies.
• PJM wholesale power: $77.78 per MWh in Q1 2025 to $136.53 in Q1 2026, a 75.5 percent rise, per Monitoring Analytics.

The Playmobil case is small in employment terms, but it is symbolically loaded: a brand long marketed as Made in Germany now makes none of its figures there. The heat pump numbers show that high fossil fuel prices do shift behaviour, but unevenly and with a policy lag. The PJM numbers show that even in a market with abundant generation potential, a single new load category can move prices 75 percent in a year.

What none of the three sources provides is a cost figure for the alternative. Brussels Signal does not quantify the subsidies that would have kept Dietenhofen open. The EHPA does not model what heat pump sales would look like without the March price shock. Monitoring Analytics does not put a number on the wealth transfer it says the backstop auction would create. Those gaps are where the next round of reporting, and the next round of political argument, will happen.